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Retail sales highlight resilience of UK consumer

Published 22/03/2024, 08:45
© Reuters.  Retail sales highlight resilience of UK consumer

Proactive Investors - UK retail sales decreased 0.4% year on year in February, a slightly better result compared to the expected 0.7% decline.

On a month-on-month basis, sales defied a forecasted decline by staying flat against the January print, aided by strong clothing and department store sales.

Matt Dalton, Partner, Risk consulting and consumer sector leader at Mazars, said the "British consumer remains resilient".

"While a 0.2% monthly rise in core retail sales may seem anaemic, it is still higher than expectations. With the exception of household goods and food stores, all categories, including clothing, saw rising volumes.

"Today’s number confirms that consumers are upbeat and gives confidence that Britain will likely not be too hard pressed to escape the technical recession.

"The figure is robust enough to suggest an economic rebound, but not strong enough to knock the Bank of England off its present course towards rate cuts. We thus believe rates will still come down probably during or slightly after the summer, further empowering British consumers."

Food and fuel were black spots in the data.

Danni Hewson, head of financial analysis at AJ Bell, surmised that “half term was a washout with parents reluctant to bundle up boisterous kids and ferry them long distances to expensive indoor activities, plumping instead for a delivery of new toys or an extra streaming service".

Hewson added: “And people are still under pressure, they are still carefully considering how they spend what little cash they have left after covering the essentials like keeping the lights on.

"Things are improving slowly but the next barrage of bill increases is just around the corner and wage increases, tax cuts and falling inflation won’t mitigate those completely. The retail sector is likely to remain volatile for months to come as people continue to feel less well-off and more vulnerable to shocks.”

Read more on Proactive Investors UK

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